Summary
Kaltura closed the second quarter of fiscal 2022 with a nearly flat top line and much deeper losses. Revenue for the quarter ended June 30, 2022 was $42.0 million, up 0.9% from $41.6 million in the prior-year quarter. Gross profit rose 2.7% to $26.7 million, and gross margin improved to 63.6% from 62.4%. Below the gross line, the picture darkens. Operating loss widened to $15.5 million from $5.8 million, and net loss widened to $17.3 million from $2.7 million. Diluted loss per share narrowed to $0.13 from $0.37. For the first six months of the fiscal year, revenue was $83.7 million, up 5.5% from $79.3 million, and gross profit was $53.0 million, up 10.1% from $48.1 million.
Operating expenses drove the swing. Research and development rose 23% to $14.4 million. Sales and marketing jumped 56% to $16.4 million. General and administrative costs climbed 20% to $11.3 million. Management ties those increases to higher headcount, more stock-based compensation and the cost of operating as a public company. Operating margin was negative 36.9% for the quarter, against negative 13.9% a year earlier. Non-GAAP operating loss was $9.1 million, compared with $1.3 million. Adjusted EBITDA was negative $8.5 million, against negative $1.0 million. The reconciliation between the two loss figures leans heavily on stock-based compensation.
Annualized recurring revenue was $151.0 million, up 4% from $145.4 million. The expansion engine is the issue. Net dollar retention fell to 100% from 121%, so the existing customer base is no longer adding revenue in aggregate. Remaining performance obligations were $172.7 million, up 10.5% from $156.3 million, and the company expects to recognize 62% of that backlog as revenue over the next 12 months. Professional services revenue declined in both segments, which management attributes to fewer large virtual events of the type that typically require substantial work.
Cash generation swung hard. Net cash used in operating activities was $22.5 million for the quarter, compared with $0.9 million provided in the prior-year quarter. Through the first six months, operating cash flow was negative $42.1 million, against negative $5.7 million a year earlier. Capital expenditures were $0.3 million for the quarter, down from $0.4 million. Current deferred revenue fell 12.1% to $51.9 million from $59.1 million. Trade receivables climbed, which absorbed working capital, and the $35.0 million revolving credit facility was undrawn as of June 30, 2022.
Guidance points to a softer near term. For the third quarter of 2022, Kaltura expects total revenue to decrease 5% to 3% year over year, to between $40.8 million and $41.7 million, with subscription revenue growing 0% to 2% to between $37.7 million and $38.4 million. Adjusted EBITDA for the third quarter is guided to negative $8 million to $10 million. For the full fiscal year 2022, management expects total revenue growth of 2% to 4%, or $168.4 million to $171.6 million, subscription revenue growth of 5% to 7%, or $152.1 million to $155.1 million, and adjusted EBITDA of negative $27 million to $32 million.
Management is cutting to protect profitability. The restructuring plan announced with the results removes roughly 10% of the employee base, with pre-tax charges of about $1 million expected in the second half of 2022 and annualized savings of about $18 million. The company is also collapsing its two reporting segments, Enterprise, Education and Technology and Media and Telecom, into one horizontal structure. Risks remain thick: the macroeconomic outlook, execution of the reorganization and realization of the expected savings, customer retention, competition, reliance on third parties, retention of key personnel, international operations and the ongoing pandemic. Management also warns that disruption in global financial markets could reduce its ability to raise capital. The cuts land while sales and marketing spend is still climbing, and the return to growth that management points to sits in the fourth quarter.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $42.0M | $41.7M | +0.6% | $41.6M | +0.9% |
| Gross profit | $26.7M | $26.3M | +1.6% | $26.0M | +2.7% |
| Gross margin | 63.6% | 63.0% | +0.6 pp | 62.5% | +1.1 pp |
| Research & development | $14.4M | $14.9M | -2.9% | $11.8M | +22.5% |
| Sales & marketing | $16.4M | $14.6M | +12.3% | $10.5M | +56.0% |
| General & administrative | $11.3M | $11.4M | -0.9% | $9.4M | +20.1% |
| Total operating expenses | $42.2M | $40.9M | +3.1% | $31.8M | +32.9% |
| Operating income (loss) | -$15.5M | -$14.7M | -5.8% | -$5.8M | -168.7% |
| Operating margin | -36.9% | -35.1% | -1.8 pp | -13.9% | -23.1 pp |
| Net income (loss) | -$17.3M | -$16.9M | -2.5% | -$2.7M | -538.0% |
| Net margin | -41.3% | -40.6% | -0.7 pp | -6.5% | -34.8 pp |
| Diluted EPS | -$0.13 | -$0.13 | ±$0.00 | $0.37 | -$0.50 |
| Net retention rate | 100.0% | 107.0% | -7.0 pp | 121.0% | -21.0 pp |
Risks
The 2022 Restructuring Plan approved August 7, 2022 includes releasing approximately 10% of employees and expected pre-tax charges of about $1.0 million, primarily severance. The company may not fully realize anticipated cost savings or liquidity benefits, and implementation may disrupt operations, cause attrition beyond planned headcount reductions, and divert management attention.
Net Dollar Retention Rate was 100% for the three months ended June 30, 2022, compared with 121% for the three months ended June 30, 2021, indicating a sharp slowdown in expansion revenue from existing customers. The company also reported decreases in revenue from existing customers in both EE&T and M&T for the quarter, partly offset by new customer revenue.
Operating cash flow decreased to negative $22.54 million for the quarter ended June 30, 2022 from positive $0.87 million in the prior-year quarter, and net loss widened to $17.35 million from $2.72 million. The company had $57.16 million in cash, cash equivalents, and restricted cash at June 30, 2022, down from $144.37 million at the beginning of the period.
The company has customer and third-party relationships in Russia, Belarus, and Ukraine, and enhanced export controls and sanctions imposed in response to the Russia-Ukraine conflict could impair its ability to provide services to or receive payments from customers in Russia. Failure to comply with export control, trade sanctions, and import laws could lead to civil and criminal penalties, loss of export privileges, and reputational harm.
Total revenue increased only 0.9% to $41.98 million for the quarter ended June 30, 2022 from $41.60 million in the prior-year quarter, and EE&T revenue increased 1% to $30.4 million. Existing customer revenue decreased by $1.4 million in EE&T and $0.8 million in M&T, with currency headwinds reducing EE&T revenue by approximately $0.4 million.
Professional services gross margin was negative 38% for the quarter ended June 30, 2022, compared with negative 9% in the prior-year quarter, and EE&T professional services swung to a gross loss of $0.8 million from gross profit of $0.4 million. This pressured overall profitability even as total gross margin improved to 63.6% from 62.4%.
The Credit Agreement requires maintaining a minimum Annualized Recurring Revenue covenant and Liquidity of at least $10 million as of the last day of any calendar month, with the ARR minimum increasing through the fiscal quarter ending December 31, 2023. The Term Loan Facility and Revolving Credit Facility mature on January 14, 2024, and failure to comply could permit lenders to accelerate borrowings.
The stockholder rights plan adopted August 7, 2022 has anti-takeover effects, including potential dilution to any person or group acquiring 10% or more of common stock, or 20% for passive institutional investors, without board approval. It may discourage a merger, tender offer, or other business combination that stockholders consider favorable.
SaaS KPIs
All quarters →Net Dollar Retention Rate
Remaining Performance Obligations
Non-GAAP Operating Margin
Annualized Recurring Revenue
Summary, forecast, risks and KPIs are extracted from KALTURA INC's SEC filings for Q2 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.